Kurt Sansone analyses some key aspects of the Labour Party document: Partnership – the best option for Malta

The Labour Party has often insisted that its partnership proposal concerns the creation of an ‘industrial’ free trade area with the European Union. The policy was even etched out in the party’s electoral programmes in 1996 and 1998.

But the new document published last week by the Labour Party in which it seeks to compare membership with partnership, drops the reference to ‘industrial’ and proposes the formation of a fully fledged free trade area.

The removal of the word ‘industrial’ is no coincidence. In 1998 Brussels reacted to the Labour Party’s alternative strategy with a clear message: any alternative arrangement had to ensure open borders for trade with the removal of levies, the introduction of VAT and also the ‘progressive liberalisation of agriculture’.

Free trade linked solely to industrial products was a non-starter for the EU.

It seems that the Labour Party has come around to accept that condition. On page 3 of the document reference is made to "the formation of a free trade area between Malta and the European Union." This is reiterated in page 27: "Under the partnership option, a free trade system would be implemented with the EU".

This section also specifies that such an arrangement "would be tailored to fit the Maltese profile while taking into account the imperatives of European integration and the special needs of Maltese agriculture, tourism and small scale industry, in conformity with WTO rules".

The third reference to a free trade area – as opposed to an industrial free trade area – is found on page 28 of the document. The section specifically states that the Maltese market would have to open up to EU producers. "With partnership, covering free trade with the EU, Malta would have all relevant access to the EU market, not by way of just benefiting, but also in return for opening up the Maltese market to EU producers".

An important change in the proposals laid down in the Labour Party’s document is the reference to agriculture and the protection afforded to the sector. Until last week the Labour Party had always insisted that agriculture would be ‘excluded’ from any deal reached with the EU.

Last week’s document spells out a slightly different scenario. The first reference to agriculture is to be found on page 3. It clearly states that Malta would have to offer the EU concessions "on items of interest".

It also includes a proviso that "both the EU and Malta maintain their protective systems for agriculture." The document stipulates that under a partnership arrangement Malta "retains the right to buy on international markets at the most competitive rates, the food items that it does not produce."

On page 19 the document explains that "protection will be retained for agricultural products deemed strategic for Malta as well as for processed agricultural goods that have a genuine Malta based value added."

There is no explanation as to what ‘genuine Malta based value added’ means. Neither does the document say how value added will be determined and which processed products would fall under that description.

However, the document reiterates that "food and other agricultural goods that are not produced in Malta will again be allowed importation without being subjected to protective levies and other barriers to trade".

Government firms and property

In what could possibly be a new side to the partnership option, page 13 of the Labour Party document says that government firms may be exposed to free market competition. "In relevant areas under the partnership policy, government firms which still operate under protection, will be exposed to free market competition in a graduated manner, allowing their management and workers to adapt progressively to the changes being introduced."

The document aims to retain the status quo on two key issues: Air Malta will be maintained as the flagship carrier and importation of fuel and electricity generation will be retained as Enemalta functions. However, the document says that a decision on liberalisation of ground handling operations in the airport will be taken in the future.

Contrary to the negotiated agreement with the EU that limits the rights of EU nationals to buy property in Malta, the Labour Party’s partnership policy proposes designated development zones where non-Maltese nationals would have "full freedom to buy property".

The special areas are not identified in the document, however it does say that "existing or equivalent management rules covering acquisition of property by non-Maltese citizens would continue to apply in the remaining Maltese territory."

Workers’ rights

Realising the positive impact of EU regulations concerning workers’ rights, in page 14 the MLP document says that "where EU rules are superior to those of Malta, action will be taken autonomously during the next legislature, to bring standards in line with those of the EU, as a social policy commitment."

This declaration means that a Labour government would retain legislation that has been enacted over recent years on health and safety in the workplace even if various Labour spokespersons have been on record saying that these will incur increased costs for industry.

It also means that the Labour Party favours the introduction of the working time directive, which regulates the amount of overtime an employer can request employees to work.

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